The viewpoint of the MOIT on the 'direct power purchase mechanism' from the renewable energy
10:25 | 02/08/2023
The objectives of developing the DPPA mechanism that MOIT reported to the Prime Minister include:
1/ Satisfying the demand of the customers for clean energy.
2/ Contributing to attract investment in the sustainable development of renewable energy, and environmental protection.
3/ It is a necessary preparatory step to move to operate the competitive retail electricity market in Vietnam.
MOIT proposed two cases of DPPA between a renewable power generator and a large electricity user in the production group. Specifically (1) PPA through a private line (invested by the private sector), and (2) PPA through the national grid system between the generating unit and the customer.
In the case of PPA through a private line, the generating unit and large electricity users are not limited in terms of conditions (capacity, output, connecting voltage level and purpose to use electricity…) The electricity generating unit is responsible for investing in the construction of power projects in accordance with the electricity development planning, and must comply with regulations on licensing electricity activities. Power generation units and customers are responsible for implementing regulations on purchasing electricity sales, electricity selling prices according to regulations. (The retail price of electricity for large electricity users is implemented in accordance with the provisions of Decision No. 1062/QD-BCT dated May 4 (the average retail price of electricity is 1,920,3732 VND/kWh) and the Circulars of MOIT.
In the case of PPA through the national grid system between the generator and the customer, the generator units and the customer must go through the electricity retailer (EVN) - that is, the buyer and the seller do not transact directly with each other as in the case of (1) buying and selling electricity through a separate line (privately invested).
The conditions for buyers and sellers in this case are: The generating unit owns the wind or solar power plant must be connected to the national power system and with an installed capacity of 10 MW or more and the large electricity users are organizations and individuals that are purchasing electricity for production purposes from a voltage of 22 kV or more. During the period when the Law on Prices and documents guiding various prices and charges have not yet taken effect, the electricity retailer distributes and supplies electricity to customers to meet the entire electricity demand for electricity retail prices stipulated in Decision No. 24/2017/QD-TTg dated June 30, 2017, by Prime Minister on stipulating the mechanism for adjusting the average retail electricity prices and Decision No 28/2014/QĐ-TTg dated April 07, 2014 by Prime Minister stipulating mechanism of electricity retail price list.
The Law on Prices and documents guiding related prices and charges take effect, electricity retailers and customers who buy electricity at the electricity price reflect correctly and fully according to the charges on the spot electricity market
plus assorted service charges (electricity transmission, distribution, operation dispatching prices, etc…)
Due to the urgency of the need for a mechanism, MOIT asked the Prime Minister to allow the development of the Decree according to the order and simplified procedures as prescribed in the Law on Promulgation of Legal Documents.
On the basis of functions and State management tasks in the electricity industry, MOIT will continue to promote units to implement the DPPA mechanism in the following ways: The renewable energy generators and the large customers implement PPA through the private line for direct connecting each other (with the legal basis for implementation) for priority to develop the projects of self -production and self-consumption projects toward the green development according to Vietnam commitment at COP26.
According to MOIT, this content is consistent with the orientation on prioritizing the development of self-production and self-consumption sufficient electricity projects and the orientation on diversifying investment forms (public and private) for power projects according to the Power Development Planning VIII approved by the Prime Minister.